Exchanging on a New Build

Smudger78

Hi,





















We are due to exchange contracts on a new build which will be completed in September next week. Our solicitors have just come back with search info etc and advised that the developer has not yet received confirmation from the Council that the new road in the new estate will be adopted or similarly confirmation from the local Water Company that the sewers which are due to be put in will be adopted.















Has anyone else who has bought off plan had experience of these adoptions not being in place at point of exchange?
The developer has told our solicitor that this is "standard" and in their view not a valid reason to delay exchanging contracts. My concern is that if either the road or the sewer are not adopted the liability for their upkeep/maintenance in the future will need to fall somewhere and by exchanging contracts this could result in it falling on us/homeowners rather than the developer.






Any advice greatly appreciated.........

filbrit

Hi There

It will depends whether or not the new road the developers built complies with to the specification for roads of your local council. This cannot be ascertained until it has been inspected and should fall within a certain warranty period. I would advice you phone the local council your new build falls under. Usually it would be the transport and development control department that would deal with road adoptions for new builds. They would be able to give you the further details you would be looking for. Hope that helps

da_rule

The developer should be able to tell you if they plan to bring the drainage and sewers and roads up to adoption standard. They will know full well what standard is required in your area. If they're not planning on bringing them up to adoption standard then they should be able to let you know about any covenants that will exist on the new build concerning maintaining them.

Ask them if they are planning to lodge a deposit with the council as part of a Section 38 Highways Act 1980 agreement (this guarantees the road will be adopted). Also, if they're going to lodge a deposit with the water board under a Section 104 Water Industry Act 1991 agreement.

If they are planning on using these agreements then I would see if you could get that, and any other guarantees they make in to the contract as a special condition.

marlot

I seem to recall that on my purchase there was similar issue. My solicitor made sure the developer had been liaising with the relevant authorities and that the developer had lodged money from them.

I also seem to recall he withheld £1000 (this was 15 years ago!) until the road was actually adopted.

ethank

The older part of our development is now 5 years old, and they still have not adopted the roads!

Smudger78

Hi,

I know this thread is a few weeks old but this issue is still rumbling on. Out lender, Tesco, have basically said that if if the road and sewer are not adopted when we want to complete then they won't release the funds. They also don't accept a 'retention' clause saying the developer will allow us to withhold £500 per agreement on completion if the road and sewer are not officially adopted at that point, the developer won't agree to this anyway so that option is dead in the water.

It seems that Tesco are quite unique in their position on this in relation to new build properties bought off plan as other buyers on the development with different lenders have apparently exchanged with their lender rasosing this issue.

So where are we now? Well our solicitor has suggested we agree to take out an indemnity policy at the point we want/need to complete if at the point the road and/or sewer have either not been adopted or at the least the agreements have been agreed and bonds lodged by the developer (which they haven't yet). We're not due to complete until Sept/Oct so by that time agreements/bonds may well be in place but if not then the indemnity policy (which covers us and the lender until the road and sewer are adopted) will need to be taken out by us at a cost of £273 before Tesco will agree to release the funds.

What a minefield this new build lark is, anyone been through this before? Is £273 for a policy of this nature on lending of circa £250k reasonable?

marlot

I'm really surprised the developer hasn't had to lodge a bond already.

Smudger78

marlot wrote: »

I'm really surprised the developer hasn't had to lodge a bond already.

Thanks for this. When would you normally expect a developer to put a bond down? Our house and the one next door are the first two due for completion Sept/Oct...

marlot

Google 'section 38 agreement'.

Here's one council's help page http://www.surreycc.gov.uk/environment-housing-and-planning/planning/transport-development-planning/frequently-asked-questions-about-adoption-of-new-housing-development-roads

Smudger78

Smudger78 wrote: »

Hi,

I know this thread is a few weeks old but this issue is still rumbling on. Out lender, Tesco, have basically said that if if the road and sewer are not adopted when we want to complete then they won't release the funds. They also don't accept a 'retention' clause saying the developer will allow us to withhold £500 per agreement on completion if the road and sewer are not officially adopted at that point, the developer won't agree to this anyway so that option is dead in the water.

It seems that Tesco are quite unique in their position on this in relation to new build properties bought off plan as other buyers on the development with different lenders have apparently exchanged with their lender rasosing this issue.

So where are we now? Well our solicitor has suggested we agree to take out an indemnity policy at the point we want/need to complete if at the point the road and/or sewer have either not been adopted or at the least the agreements have been agreed and bonds lodged by the developer (which they haven't yet). We're not due to complete until Sept/Oct so by that time agreements/bonds may well be in place but if not then the indemnity policy (which covers us and the lender until the road and sewer are adopted) will need to be taken out by us at a cost of £273 before Tesco will agree to release the funds.

What a minefield this new build lark is, anyone been through this before? Is £273 for a policy of this nature on lending of circa £250k reasonable?

So just when you are getting somewhere three insurance companies have refused to offer the indemnity cover (above) because the development is covered by a Premier Guarantee rather than an NHBC Guarantee. This is a bit disconcerting but the solicitor has now approach a fourth insurer who we think will offer cover - anyone any ideas why insurers are viewing the NHBC and Premier Guarantee's differently?